Correlation Between Homecast CoLtd and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Homecast CoLtd and Kukdo Chemical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Homecast CoLtd and Kukdo Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homecast CoLtd and Kukdo Chemical, you can compare the effects of market volatilities on Homecast CoLtd and Kukdo Chemical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Homecast CoLtd with a short position of Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homecast CoLtd and Kukdo Chemical.
Diversification Opportunities for Homecast CoLtd and Kukdo Chemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Homecast and Kukdo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Homecast CoLtd and Kukdo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical and Homecast CoLtd is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Homecast CoLtd are associated (or correlated) with Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Homecast CoLtd i.e., Homecast CoLtd and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Homecast CoLtd and Kukdo Chemical
Assuming the 90 days trading horizon Homecast CoLtd is expected to generate 2.0 times more return on investment than Kukdo Chemical. However, Homecast CoLtd is 2.0 times more volatile than Kukdo Chemical. It trades about 0.03 of its potential returns per unit of risk. Kukdo Chemical is currently generating about -0.14 per unit of risk. If you would invest 239,000 in Homecast CoLtd on September 14, 2024 and sell it today you would earn a total of 2,000 from holding Homecast CoLtd or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homecast CoLtd vs. Kukdo Chemical
Performance |
| Timeline |
| Homecast CoLtd |
| Kukdo Chemical |
Homecast CoLtd and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homecast CoLtd and Kukdo Chemical
The main advantage of trading using opposite Homecast CoLtd and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homecast CoLtd position performs unexpectedly, Kukdo Chemical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| Homecast CoLtd vs. Cube Entertainment | Homecast CoLtd vs. Dreamus Company | Homecast CoLtd vs. LG Energy Solution | Homecast CoLtd vs. Dongwon System |
| Kukdo Chemical vs. Air Busan Co | Kukdo Chemical vs. Hansol Homedeco Co | Kukdo Chemical vs. Hannong Chemicals | Kukdo Chemical vs. Homecast CoLtd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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